Nvidia complains about Intel tactics
Nvidia has joined Advanced Micro Devices (AMD) in complaining loudly about the tactics Intel uses to sell its products, especially the strong-arm bundling of video chips with CPUs.
Intel dominates the PC CPU market, which is the area in which AMD has been disputing the marketing tactics used by Intel for years. AMD’s complaints were resolved recently in a $1.25 billion settlement with Intel, primarily based on the bundling tactics Intel allegedly uses in selling its products. These are essentially the same tactics about which Nvidia is upset, though in their case it is the bundling of Intel’s video processors along with its CPUs that are at issue.
Intel is the undisputed world leader in central processing units for personal computers. That does not particularly concern Nvidia, except in that it effects Intel’s ability to pressure CPU buyers into also using Intel graphics processors as well by very aggressively pricing the video components. The video processor marketplace alone is approximately $10 billion in size annually according to a CNET story, and therefore well worth fighting over. Although Nvidia is the leading supplier of stand-alone video processors worldwide, a fairly small market, it is a very distant second to Intel in the larger overall marketplace.
Nvidia CEO Jen Hsun Huang puts it this way: “Intel’s tactics with Ion have been the most aggressive we’ve seen from a competitor. They have offered the Atom [a total of three chips] for $25, but when the one-chip Atom is used with Ion, it sells for $45. A customer can’t even choose to resell the chipset and use Ion instead. What’s the point of Nvidia getting an Intel bus license if it’s impossible to overcome Intel’s pricing bundles? … We’ll keep growing as a company, but further action needs to be taken to protect consumers.”
Intel disagrees. Their spokesperson, Chuck Mulloy, says “He’s playing a trick of numbers. He’s giving you a $45 list price–that nobody pays–for a part and then a negotiated price (which is more realistic). He’s mixing apples and oranges. We have scrubbed and continue to scrub our pricing practices as it relates to chipsets and processors. It’s all above cost. And that meets the legal standard worldwide.”
The Nvidia dispute is reminiscent not only of AMD’s complaints against Intel but of similar, less related, problems in the industry, such as those frequently heard about Microsoft’s marketing (and bundling) practices. It is sad that so much of what is supposed to be technological free-market capitalism is today more often than not fought out in a court of law and not the marketplace.
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November 16th, 2009
I completely agree, microsoft and intel should not be forced to pander to their competition. I use an AMD processor and run SLI, I’ll always buy the best motherboard I can no matter who makes it but my selections are limited.
November 16th, 2009
I completely agree, microsoft and intel should not be forced to pander to their competition. I use an AMD processor and run SLI, I’ll always buy the best motherboard I can no matter who makes it but my selections are limited. I use microsoft windows and firefox on the web; I would uninstall IE if I wasn’t studying web development. The bundle is pointless.